Exxaro Resources : Material information about our strategic decisions and operational performance

Exxaro

Resources

Limited

Integrated report for the year ended 31 December 2023

Contents

• Building momentum and resilience for sustainable growth and impact

• About this report

• Delivering sustainable value creation

Navigating this report

We use icons to show:

Read more online at www.exxaro.comunder the investors tab

• Snapshot of our long-term value creation

• Chairperson's statement
  10 Who we are
  14 Our operating context

Our business

1. Our business model

1. Our material matters

28 Our risks and opportunities

How we create 39 Engaging our stakeholders value

	45	CEO's report
	47	Our strategy
Strategically	50	Performance against our strategy
positioning the		and outlook
business for
growth

Read more in this report

Material themes that guide our integrated reporting

Adapting to a changing context

Responsible environmental stewardship

Building sustainable communities

Helping our people thrive

Executing our strategy

Driving business resilience

Principled governance

The capitals we use and affect

Natural

Human

Social and relationship

Manufactured

Intellectual

Financial

	56	Our leadership
	61	Summarised governance report
Building	81	Combined assurance for effective
	governance
resilience

through

governance

Reporting suite

We are committed to transparent reporting and publish an annual reporting suite detailing our performance:

Environmental,	Group and
social and	company annual
governance (ESG)	financial
report	statements
Consolidated	Summarised
annual financial
Mineral
statements and
Resources and

Our

performance

1. Finance director's overview

1. Operational performance

1. Business resilience

1. Building momentum with people

1. Social impact

109 Our environmental stewardship

120 Responding to TCFD reporting requirements

Mineral Reserves	notice of annual
general meeting
(CMRR) report
(AGM)

These reports and other supplementary reports are available onlineand should be read together for a complete understanding of our business and performance.

Connect with us

121 Our Mineral Resources and Mineral Reserves

Our Mineral

Resources and

Mineral

Reserves

We encourage and welcome feedback on our reporting suite from our stakeholders. Please send any comments or suggestions to:

Malusi Buthelezi

Manager: Governance and reporting

Tel: [phone]

Mobile: [phone]

Email: [e-mail]

www.exxaro.com

124	Glossary	Follow us on Facebook, X,
125	Administration	Instagram, LinkedIn and YouTube

Our business

How we create value

Strategically positioning the business for growth

Building resilience through governance

Our performance

Our Mineral Resources and Mineral Reserves

Building momentum and resilience for sustainable growth and impact

Welcome to our 2023 integrated report, which explains how we are building momentum and increasing our resilience in a turbulent macro-economic climate in line with our ambition to achieve sustainable growth and impact.

Dr Nombasa Tsengwa

Chief executive officer (CEO)

The previous year laid bare the intricate tapestry of challenges that define our times - from geopolitical upheaval to the tenuous responses of global markets to surging inflation and shifting energy paradigms.

As the clarion call for a sustainable future grows louder, we recognise our dual imperative: to bolster energy security by ensuring a reliable coal supply and to navigate our strategic transition towards cleaner energy. This commitment is crucial, not just for maintaining the reliability of our nation's energy supply but as a cornerstone for supporting South Africa's economic growth and prosperity.

We aim to grow from the exceptional business we have developed over the past 18 years, continuously building momentum and resilience for sustainable growth and impact. Our rich history is the foundation for our progress, moving from a past focused solely on mining to embracing the energy landscape of the future with an approach that emphasises energy security, endorses resources for a cleaner world and supports a just transition to a carbon-neutral future by 2050.

To support this forward-looking approach, we meticulously evaluated our Sustainable Growth and Impact strategy during the year regarding its progress, timing and scenario planning. This included endorsing a unified ESG framework, developing an ESG policy and enhancing our strategic approach to sustainability. The creation of a strategic performance management dashboard further amplifies the visibility of strategy execution.

Our energy initiatives and the strategic selection of minerals for diversification reflect our proactive approach to the global energy transition and our contribution to a carbon-neutral future. The lessons learned over the past two years in evaluating potential opportunities in critical minerals and energy have refined our approach, ensuring expansion efforts are well considered and aligned with our core sustainability and value creation principles. These experiences have reinforced our commitment to resilience - withstanding market pressures and preparing to capitalise on opportunities with agility and foresight.

We have also made significant progress in our Climate Change Response strategy by creating a comprehensive decarbonisation roadmap with an ambitious goal of achieving carbon neutrality. This roadmap, in its mature phase, outlines the actions that will guide the group towards a sustainable transition, anticipating more stringent environmental regulations. Our Lephalale solar project (LSP) is a tangible representation of our commitments and is poised to deliver a 27% reduction in scope 2 emissions on completion. This project complements our core coal business and reflects our comprehensive approach to energy provision.

We stand ready to apply our learnings in a way that propels us forward. We are poised to engage with the future of energy with the same dedication and focus that has seen us through the past years. This is the essence of our story - a tale of resilience, learning and a steadfast commitment to making a sustainable impact. It is a narrative we carry into the future as we continue to shape an enduring legacy in powering possibility.

Exxaro Resources Limited Integrated report 2023

1

About this report

Exxaro's integrated report for the year ended 31 December 2023 is a value creation story for our stakeholders, particularly our shareholders and other providers of financial capital.

Scope and boundary

The report contains material information about our strategic decisions and operational performance for the period

1 January 2023 to 31 December 2023 (the 2023 financial year). It covers the financial and non-financial information of our wholly owned and joint arrangements in South Africa, Europe and Australia.

The reporting boundary incorporates material information about the Cennergi group of companies (Cennergi). We consolidated material information about Cennergi Proprietary Limited's safety incidents into the group's results.

We include limited information on operations where we:

• Do not have management control but hold an important equity interest, namely Black Mountain Proprietary Limited (Black Mountain), Richards Bay Coal Terminal Proprietary Limited (RBCT) and Sishen Iron Ore Company Proprietary Limited (SIOC), or
• Have joint control, namely Mafube Coal Proprietary Limited joint venture and Moranbah South project (joint operation)

Reporting boundary

(risks, opportunities and outcomes)

	Strategy(page 47)		Stakeholders
		(page 39)
	Business model(page 20)	•	Government and
	Operational performance		regulators
	•	Employees and
	(page 90)
		labour unions
	Material matters(page 24)	•
	Communities
	Risks and opportunities	•	Investors
	(page 28)	•	Suppliers
	Governance(page 55)	•	Customers
	•	Civil society
Financial reporting entity	•	Others
(control and significant influence)
•	Subsidiaries
•	Joint arrangements
•	Investments

Materiality

We distinguish the information to include in our reporting suite through a double materiality determination process, which identifies the matters that impact our ability to create enterprise value (financial materiality) and our impact on the environment, communities and society (impact materiality).

We group these material matters (page 24) into themes that link to the resources we use and affect.

Only matters that could substantively affect our ability to create value in the short (one to five years), medium (six to 10 years) or long term (>11 years) are reported on in our integrated report. We understand, however, that sustainability issues can shift between impact and financial materiality. We therefore conduct an annual materiality determination process to assess this movement.

Impact

materiality

Dynamic materiality

Financial

materiality

All sustainability matters affected

by or that affect Exxaro

All sustainability matters that reflect our significant impacts on the environment and people.

A sub-set of sustainability-related risks and opportunities that could substantively affect our ability to create value in the short, medium or long term.

Monetary amounts in the financial statements reflecting the effects on enterprise value that have already taken place at the reporting date, or are included in future cash flow projections.

Dynamic materiality

Our reporting suite	Audience
ESG	All stakeholders seeking
to understand the
report
entity's significant
	sustainability impacts
Integrated	Investors, lenders and
report	creditors seeking to
	assess enterprise value
Group and company
annual financial
statements
Summarised annual	Primarily investors
and capital markets
financial statements
and notice of AGM
CMRR report

• Exxaro Resources Limited Integrated report 2023

Our business

How we create value

Strategically positioning the business for growth

Building resilience through governance

Our performance

Our Mineral Resources and Mineral Reserves

Integrated thinking

Our belief in sustainable value creation is inspired by carefully considering the relationship between the resources we use and affect and potential trade-offs in strategic decision making. We integrate the six capitals into our business model and strategy and continuously strive to positively contribute to, and negate any adverse impact on, these capitals.

Our approach to integrated thinking is translated into this report's value creation message, content and structure. This is supported by the information outlined in our ESG report, detailing our performance against our ESG commitments.

As part of embedding ESG into the business, we voluntarily endorse the United Nations (UN) 17 Sustainable Development Goals (SDGs). We also participate in the National Business Initiative in South Africa to align the 17 SDGs with the country's National Development Plan and implement leading practices to uphold the most material SDGs so that our business leaves a lasting positive impact. The SDGs that Exxaro materially impacts are highlighted in colour.

Frameworks and guidelines

Our reporting suite is guided by and applies the following:

	IR	ESG	AFS	CMRR
Materiality determination process	x	x
Integrated Reporting Framework	x	x	x
Companies Act of South Africa, 2008 (Act	x	x	x	x
71 of 2008), as amended (Companies Act)
International Financial Reporting	x	x	x
Standards (IFRS®) Accounting
Standards*
JSE Limited (JSE) Listings Requirements	x	x	x	x
and Debt Listings Requirements
Department of Trade, Industry and
Competition (dtic) Broad-based Black	x	x		x
Economic Empowerment (B-BBEE) Codes
of Good Practice
The effective parts of the Broad-based
Socio-economic Empowerment Charter	x	x
for the Mining and Minerals Industry 2018
(Mining Charter III)
King IV Report on Corporate	x	x	x
Governance™ for South Africa, 2016
(King IV)**
South African Code for the Reporting of	x	x	x	x
Exploration Results, Mineral Resources
and Mineral Reserves, 2016 edition
Global Reporting Initiative standards	x	x
(elements of the ESG report are cross-
referenced for a broader perspective)
United Nations Global Compact (UNGC)	x	x
Sustainability Accounting Standards	x	x
Board
Task Force on Climate-Related Financial	x	x
Disclosures (TCFD) recommendations***

* As issued by the International Accounting Standards Board.

** Copyright and trademarks are owned by the Institute of Directors South Africa and all of its rights are reserved.

*** This now falls under the custodianship of the IFRS Foundation.

Assurance

KPMG provided independent reasonable assurance over key sustainability information in the ESG report. The assurance report is available on page 190 of the ESG report.

Board responsibility

The board of directors (board) acknowledges its responsibility for ensuring the integrity of our reporting suite, including this integrated report, which was prepared in accordance with the Integrated Reporting Framework. The board believes the report addresses all of Exxaro's material matters and presents a balanced view of our strategy, business model and Exxaro's ability to create and preserve value over the short, medium and long term, as defined by the six capitals. The report remains the ultimate responsibility of the board, is prepared under the supervision of senior management and is subject to rigorous internal and external assurance reviews.

Mvuleni Geoffrey Qhena	Dr Nombasa Tsengwa	Riaan Koppeschaar
Independent chairperson	CEO	Finance director
Geraldine Fraser-Moleketi	Karin Ireton	Ben Magara
Lead independent non-executive director	Independent non-executive director	Independent non-executive director
Billy Mawasha	Nondumiso Medupe	Dr Phumla Mnganga
Independent non-executive director	Independent non-executive director	Independent non-executive director
Nosipho Molope	Chanda Nxumalo	Peet Snyders
Independent non-executive director	Independent non-executive director	Independent non-executive director
Isaac Malevu	Likhapha Mbatha	Zwelibanzi Mntambo
Non-executive director	Non-executive director	Non-executive director
Mandlesilo Msimang
Non-executive director
10 April 2024

Exxaro Resources Limited Integrated report 2023

3

Delivering sustainable value creation

In line with our purpose of powering better lives in Africa and beyond, our ambition is to provide resources (energy, commodities, capital and people) critical to ensuring a low-carbon world.

Long-term forces shaping our way forward…

We must balance South Africa's socio-economic development, which relies on coal-generated power, with supporting the transition to a low- carbon economy. These major changes will raise future challenges and increase external risks for those who do not adapt. They will also present significant opportunities for those who can evolve.

Climate change

Energy transition

Just transition

Stewardship

Climate change increases competition between communities for scarce resources like water and biodiversity. Rising heat increases the risk of health and safety incidents at our operations.

The growth in disruptive technology in the energy sector could displace our business in the medium to long term.

The transition to a low-carbon economy has significant socio-economic implications for our business and the communities in which we operate.

We believe we do not own coal assets but are stewards who responsibly maximise their value. We have a responsibility to use these coal assets to build a sustainable business for our investors, employees, and communities, as well as a sustainable future for the planet.

…unfolding within our context

Our operating context(page 14)

Forces in our macroeconomic context, markets and other short to medium-term social and environmental trends could present opportunities or risks to our business model and thus affect our ability to create value.

Risks and		Stakeholders'		Material matters
opportunities(page		needs and concerns		(page 24)
28)		(page 39)
Material risks and related		Our stakeholder		These elements inform the
opportunities are key factors		relationships and active		themes we consider
that must be managed to	+	engagements are crucial in	=	material to our value
ensure our continued	understanding and	creation and influence our
success. We further assess	delivering value and	strategic direction.
climate risks according to	impact.
+ the recommendations of
the TCFD.

We are navigating the tension between a rapid energy transition and a just, equitable shift that benefits all stakeholders through our responsive strategy…

… that positions Exxaro for sustainable growth and impact.

• Exxaro Resources Limited Integrated report 2023

Our business

How we create value

Strategically positioning the business for growth

Building resilience through governance

Our performance

Our Mineral Resources and Mineral Reserves

Delivering value through purpose…

Our purpose is the reason we exist. It guides our long-term decision making and daily actions. To achieve our purpose, we must deliver on three core areas of value. These are the linchpins of our relevance and sustainability as a business. Value for Exxaro is therefore inextricably tied to our ability to achieve these aims:

Energy

security

Resources

powering

• clean world

Just

transition

Supplied 42.5Mt of coal product, powering households and industries in Africa and beyond

Increased capital investment in Grootegeluk and Belfast by 57%, in line with our early value strategy

727GWh of wind energy, powering approximately 21 900 average South African households per year in line with our decarbonisation goals

Cennergi provides 229MW of wind energy to Eskom and aims for a 1.6GW capacity of internal and external offtake by 2030 as part of our renewable energy expansion

Financial close of the LSP reinforces our commitment to sustainable energy investments. This will reduce scope 2 emissions by 27% on completion in 2025

For each stakeholder group, we also aim to create and preserve relevant value:

Engaging our stakeholders(page 39)

Building resilience through governance(page 55)

Our performance(page 82)

Government and regulators - driving sustainable development

We create value for the governments and regulators in the regions where we operate through transparent operations that contribute to economic growth and energy access, and collaborate on projects echoing national and regional energy strategies and sustainability objectives.

Employees - powering possibility

We empower our employees with opportunities for career growth, equitable compensation, and a safe work environment. We are also committed to delivering resources to power a clean world, resonating with our people's aspirations for a sustainable future.

Communities - nurturing resilience and socio-economic growth

By integrating community needs into our operational strategy, we aim to foster sustainable growth and a resilient socioeconomic structure that supports community prosperity and our business's sustainability. Our initiatives are tailored to support a just transition to a sustainable future, creating employment and reskilling opportunities for communities living in and around our operations.

Customers - energising progress

We deliver value through our early value strategy and our market to resource strategy to meet our customers' needs while contributing towards energy security in South Africa and beyond. We also seek to supply minerals and energy that enable the energy transition, nurturing trust-based, innovative partnerships that support our collective vision for sustainable development.

Investors - investing in tomorrow

We are bolstering the energy sector while strategically decarbonising to augment our coal business's competitive edge and longevity. Our diversification into key minerals and energy underpins a sustainable development vision. This strategic direction strengthens trust and delivers long-term value to investors through responsible growth and investment in the future.

Suppliers - strengthening supply chain sustainability

In our approach to supplier engagement, we focus on local procurement, which supports community businesses and aligns with our sustainability goals by reducing logistical impacts. This not only strengthens local economies but also fosters deeper community ties. Concurrently, we are dedicated to enhancing our supply chain's robustness and reliability, which we achieve by investing in our suppliers' capabilities and advocating for best practices. Additionally, our suppliers are integral to our decarbonisation journey. We educate them on climate change, carbon pricing, and adaptation strategies, deepening their understanding and encouraging active participation in climate resilience and mitigation efforts.

Environment - sustaining environment

We minimise our environmental impact through responsible mining practices, investment in renewable energy initiatives, and a deep commitment to biodiversity and the natural world.

Exxaro Resources Limited Integrated report 2023

5

Snapshot of our long-term value creation

For the past five years, Exxaro has demonstrated our commitment to creating and preserving value for our stakeholders. By practising environmental and social stewardship, supported by good governance structures, we ensure the sustainability of our business and create value over time.

Since 2019...

45 168ML of	19% and 12%
reduction in
water	absolute
recycled	scope 1 and 2
	emissions
Contributing	Total alien
R5 million
towards rhino	vegetation
conservation	cleared
every year
2 872ha
since 2020

Total economic	610 jobs created
value created for	through SLP
stakeholders
projects
R7.43 billion
Total spent on skills	Total spent on
development	CSI
R1.39 billion
R429 million

Board gender	Board racial
diversity increased	diversity increased
by 56	%		from 71% to 81%
Consistently	1 335 employees
recognised in the
trained in implicit
Bloomberg GEI	and unconscious
since 2014	bias since 2020

R63 million invested in climate change research and development

Contributed over

R900 million in ESD funding since 2018

Maintained an average score above 4/5 for governance in the FTSE Russell Index

• Exxaro Resources Limited Integrated report 2023

Our business

How we create value

Strategically positioning the business for growth

Building resilience through governance

Our performance

Our Mineral Resources and Mineral Reserves

Our business

Exxaro is positioning itself to navigate a rapidly evolving landscape, with environmental sustainability and social equity as key drivers. Led by our purpose, we will not only adapt but thrive, transforming our operations to provide resources that contribute to a cleaner, more equitable world.

• Chairperson's statement
  10 Who we are
  14 Our operating context

Exxaro Resources Limited Integrated report 2023

7

Chairperson's statement

In the face of myriad challenges, our strategic initiatives and the collective resilience of our people and operations enabled us to not only withstand but also navigate volatility with confidence and purpose, recording the second highest ever EBITDA of R13.4 billion, thus laying a solid foundation for continued growth and impact.

Mvuleni Geoffrey Qhena

Chairperson

For Exxaro, the volatile macro-economic climate impacted commodity markets and trade, making strategic flexibility essential. The group navigated these global upheavals while contending with South Africa's internal challenges, including the ongoing constraints of inadequate infrastructure and logistics supply.

Building on legacy, embracing the future

As Exxaro moves forward, we find ourselves at a pivotal juncture, urged by the global mandate for environmental stewardship and climate action. Exxaro has made strides in our climate strategy, developing a comprehensive decarbonisation roadmap with the ambitious endpoint of carbon neutrality by 2050. In its mature phase, this roadmap outlines actions to guide the group's sustainable transition in anticipation of more stringent environmental regulations, reaffirming Exxaro's leadership in sustainable practices.

The board rigorously evaluated Exxaro's Sustainable Growth and Impact strategy's progress, timing, and scenario planning against our strategic scorecard framework. This included endorsing a unified ESG framework and enhancing our strategic approach to sustainability. We also evolved our strategic performance management dashboard, improving the visibility of strategy execution and enriching governance discussions within Exxaro's tiered governance structure.

Adapting to an evolving landscape, our annual board governance roadshow delved into the potential impact of global sanctions and financial threats, including grey listing and interest rate fluctuations. The discussions led to a thorough analysis of these risks and their implications for Exxaro, which remains under active board and committee review.

Exxaro's resilient operations are rooted in innovation and strong technical expertise, reinforcing safe production, robust financial performance and an effective approach to our strategic capital allocation. To support this, the board has been leveraging our Digital@Exxaro strategy, deep mining and energy expertise, strong balance sheet, stable earnings, high-quality products and a strong record of delivering sustainable impact.

Fostering robust governance and leadership continuity

The board continues to demonstrate its commitment to governance excellence as the bedrock for sustained value creation. Leadership quality is paramount for strategic success, necessitating the right blend of skills, diversity and oversight at the board level. Our board consistently focuses on achieving the right size, balance, independence and diversity to effectively fulfil its governance mandate.

Demonstrating our dedication to these principles, Andiswa Ndoni transitioned from group company secretary to the chief strategic resilience and governance officer. Her expertise will continue to benefit the group in this pivotal role. Michelle Nana will succeed her as group company secretary from 1 May 2024. With a background spanning over 30 years in company secretarial roles across various geographies, and as a law graduate and esteemed member of relevant professional bodies, Michelle is well positioned to uphold the governance standards that underpin our operations.

We are also pleased to announce Nosipho Molope's appointment as an independent non-executive director and a member of the audit committee effective from 3 January 2024. Nosipho, a distinguished chartered accountant, brings extensive experience from her service on numerous boards, enhancing our governance with her proficiency in audit, risk and ethical oversight.

While we embrace these new appointments, we also bid farewell to Likhapha Mbatha who retires by rotation at the 2024 AGM. Likhapha retires as a member of the social, ethics and remuneration committee and has made a lasting impact on Exxaro. The board extends its gratitude for her exceptional service.

These changes reflect Exxaro's ongoing commitment to strategic board renewal and succession planning, ensuring the group remains at the forefront of governance excellence and prepared to navigate future challenges with resilience and integrity.

• Exxaro Resources Limited Integrated report 2023